[Reporter’s Notebook] Does Changing Insurance Really Change People?

Fifth-Generation Indemnity Health Insurance:
The Gap Between Rational Reform and Consumer Choices

Loss Aversion: Why People Hesitate to Give Up Existing Coverage

A “Good Policy” Is Hard to Abandon: The Need for Persuasive Redesign

"The fifth-generation indemnity health insurance policy is said to offer much lower premiums. Are you considering switching?"

The reporter posed this same question to several acquaintances, but the responses were largely similar.

"What I have now is already good enough. Why change for no reason? What if I end up worse off after switching?"

The fifth-generation indemnity health insurance reform being promoted by the financial authorities is structured to lower premiums in exchange for reduced coverage. Premiums will be on average more than 30% lower than those of the fourth generation. The goal is to stabilize the loss ratio by curbing excessive use of non-covered medical services. From the perspective of the 'loss ratio' alone, it is a rational reform. However, consumer sentiment is different. Even though a policy change has been announced, responses remain lukewarm.

Why aren't people moving to the fifth-generation indemnity health insurance? The answer lies in the psychological phenomenon known as 'loss aversion.' Policyholders of previous generations can continue to enjoy their current coverage as long as they maintain their policies. However, the moment they switch to a new policy, those benefits disappear. While people intellectually understand that premiums will be cheaper, the anxiety over losing the coverage they currently hold is not easily overcome. The sense of immediate 'loss of coverage' often feels greater than the potential savings they might realize in the future.

The perspectives of insurers and financial authorities are also understandable. They know that if they do not fix an unsustainable insurance structure now, the costs will be even greater in the future. On the other hand, from the policyholder's perspective, there is no reason to give up favorable conditions and make a choice that feels like a loss right now.

This phenomenon is not unique to the fifth-generation indemnity health insurance issue. When the fourth generation was first introduced, there was some movement, but over time, the pace of switching slowed. The perception that new insurance policies are 'not better' than existing ones is only getting stronger.

The industry expects incentives such as 'contract repurchase' or 'premium discounts' may be introduced. However, to spread the concept of 'pay less, receive less coverage,' more sophisticated persuasion will be needed. Options such as maintaining part of the existing coverage, gradually adjusting coverage, or creating a soft-landing scenario where the structure changes naturally over time could also be considered.

Every time a new insurance product is launched, insurers have made significant efforts to encourage policyholders to switch. But just because insurance changes, people do not necessarily follow suit. Policy intentions may be rational, but sometimes what moves people is not 'logic' but 'how they feel.' Ignoring this simple fact may mean the outcome of this reform is already predetermined.

This content was produced with the assistance of AI translation services.